Vietnam Manufacturing Tracker: August 2026 Update

The manufacturing sector is the cornerstone of Vietnam's economic growth and resilience. The government has undertaken several initiatives to leverage the country's inherent strengths, resulting in tangible outcomes supported by compelling data. The Vietnam Manufacturing Tracker by Vietnam Briefing offers the latest data, insights, and policy updates to keep foreign investors and analysts informed about the industry.

Over the past few decades, Vietnam has effectively leveraged its key advantages to become a major player in global supply chains, with its role gaining even more prominence amid the "China Plus One" production relocation strategy.

This growing importance is primarily driven by Vietnam’s labour-intensive manufacturing sector, characterised by relatively low labour costs, well-developed export infrastructure, and a strategic location on major trade routes.

The Vietnamese government has been proactive at both national and provincial levels, implementing measures such as national schemes, generous corporate income tax breaks for high-tech companies, and the development of specialised industrial zones.

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Vietnam GDP and the value added by the manufacturing sector

Vietnam's GDP grew 8.18 percent year-on-year in the first half of 2026, up from 7.63 percent in the same period of 2025. The government has set an ambitious target of a 10 percent increase in 2026. Vietnam’s industry and construction sector expanded by 9.81 percent, contributing 47.20 percent to overall economic growth.

Industrial activity maintained strong momentum, supported by strengthened growth drivers, recovering export orders, and the positive spillover effects of public investment. Industrial value added rose 9.86 percent year-on-year in the first six months of 2026, accounting for 40.35 percent of total economic value-added growth. Manufacturing and processing remained the economy's primary growth engine, with value added increasing 10.23 percent, contributing 33.07 percent to overall economic growth.

Vietnam’s government has set an ambitious target of a 10 percent increase in 2026.

For further information, see: Vietnam Economic Performance in 2025: GDP, FDI, and Trade

Vietnam Manufacturing PMI August

• Vietnam’s manufacturing Purchasing Managers’ Index (PMI) rose from 9 in July to 53.3 in August, its strongest reading since February and the 14^th consecutive month of expansion.
• Output increased at its fastest pace in just over two years, while new-order growth reached its highest level since October 2025.
• Growth was supported by new product launches, improving customer demand, better material availability and softer price pressures.
• Domestic demand remained strong, but new export orders declined marginally for the first time in four months amid geopolitical uncertainty.
• Employment fell again – the fifth reduction in six months – because of resignations, retirements and reduced use of temporary workers.
• Backlogs increased for the second consecutive month, indicating pressure on production capacity despite lower staffing.
• Purchasing activity continued to expand, although growth slowed to a three-month low. Both input and finished-goods inventories declined.
• Supplier delivery times lengthened only marginally, suggesting that transport disruption eased during August.
• Input-cost inflation slowed to an 11-month low, while selling-price inflation moderated for the fourth consecutive month.
• Manufacturers remained optimistic about the coming year, supported by new products, additional capacity and stronger demand, although business confidence weakened slightly from July.

The S&P Global Manufacturing PMI reflects the manufacturing sector’s performance by surveying 400 firms in the industry. The PMI is built on five weighted sub-indexes:

• New orders (30 percent)
• Output (25 percent)
• Employment (20 percent)
• Suppliers’ delivery times (15 percent)
• Stock of items purchased (10 percent)

A reading above 50 indicates an expansion of the manufacturing sector compared to the previous month, below 50 represents a contraction, while 50 indicates no change.

Vietnam Index of Industrial Production: August 2026

• Vietnam’s Index of Industrial Production (IIP) increased 1.5 percent month on month and 4 percent year-on-year in August 2026. Industrial output saw year-on-year increase across all 34 cities and provinces.
• Mining recorded the fastest growth, rising 18.5 percent.
• Electricity production and distribution expanded 11.8 percent.
• Water supply, waste management, and treatment increased 9.5 percent.

Several major industrial sectors recorded double-digit growth during the first eight months of 2026. Basic metal production grew the fastest, rising 22.4 percent year-on-year. This was followed by beverage manufacturing at 16.4 percent, motor vehicles at 15.9 percent, and electrical equipment at 14.6 percent.

The manufacture of computers, electronic, and optical products increased by 13.9 percent. Furniture production rose 12.7 percent, while other non-metallic mineral products expanded by 12.6 percent. Rubber and plastic products grew 12.3 percent, wood processing 12.2 percent, and chemicals and chemical products 11.9 percent.

Growth was more limited in leather and related products, at 3.6 percent, while the mining of hard coal and lignite contracted by 1.8 percent.

Industrial production increased across all 34 centrally governed provinces and municipalities during the eight-month period. In the fastest-growing localities, expansion was principally supported by manufacturing and processing or electricity production and distribution.

At the product level, motorcycle output rose 27.9 percent year-on-year, followed by laptops at 25.7 percent, automobiles at 24 percent, and rolled steel at 23.4 percent. Processed seafood, refined sugar, steel bars and angles, beer, and chemical paints also recorded double-digit growth.

Some products registered lower output. Production of NPK compound fertiliser declined by 8.6 percent, monosodium glutamate by 8.1 percent, leather footwear by 4.2 percent, and liquefied petroleum gas by 3.2 percent.

Employment in manufacturing

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August 2026 update

Employment in industrial enterprises continued to expand. As of 1 August 2026, the industrial workforce had increased by 1 percent month on month and 3.8 percent year-on-year.

Manufacturing and processing recorded employment growth of 1 percent from the previous month and 4 percent from a year earlier. Mining employment declined by 0.1 percent month on month and 0.7 percent year-on-year.

Employment in electricity, gas, steam and air-conditioning supply remained unchanged from July but increased by 1.9 percent year-on-year. Water supply, waste management and wastewater treatment recorded the strongest annual employment growth, rising by 0.1 percent month on month and 5 percent year-on-year.

Also read: Vietnam Wages in 2025: Overview, Trends and Implications for Investors

Note: (*) Data from 2021-2023 were calculated following the ICLS19 standard. Under ICLS19, people working to produce self-sufficient products in the agriculture, forestry, and fishery sectors will not be identified as employed as per the ICLS13 standard.

Investment highlights for January–August 2026

• State-budget investment disbursement reached an estimated VND 105.7 trillion in August, up 24.1 percent year-on-year.
• Cumulative State-budget investment stood at VND 546.8 trillion, equivalent to 50.5 percent of the annual plan and up 18.5 percent year-on-year.
• Total registered inward FDI, including new registrations, adjusted capital, and capital contributions and share purchases, reached US$40.63 billion, rising 55.4 percent year-on-year.
• Disbursed FDI increased 12 percent to an estimated US$17.25 billion.
• Vietnam’s outward investment reached US$2.62 billion, approximately 4.7 times the level recorded in the same period of 2025.
• Outward investment comprised 113 newly licensed projects worth US$1.21 billion and 29 capital adjustments adding US$1.41 billion.

Foreign direct investment in Vietnam’s processing and manufacturing industry

Vietnam’s merchandise exports

• In the eight months of 2026, total merchandise trade reached a record US$770.14 billion, up 28.7 percent year-on-year.
• In August alone, the total export and import turnover of goods reached US$109.7 billion.
• In August, the export turnover of goods increased 3.2 percent month on month to reach US$54.79 billion, while the import turnover of goods rose 3.1 percent month on month at US$54.91 billion.
• From January-August, the export turnover of goods increased 22.4 percent year-on-year to US$374.84 billion, while imports rose faster by 35.3 percent year-on-year to US$395.30 billion. The FDI sector (including crude oil) generated US$300.37 billion, or 80.1 percent of export turnover. Domestic enterprises accounted for the remaining US$74.47 billion.
• In the first eight months of 2026, the trade balance shifted to a US$20.46 billion deficit, compared with a US$14.02 billion surplus in the same period of 2025.
• Manufactured products dominated exports, reaching US$337.99 billion and accounting for 90.2 percent of export turnover.
• Capital goods represented 94.1 percent of imports, reaching US$372.04 billion.
• The United States remained Vietnam’s largest export market, receiving US$122 billion in goods. China was its largest import market, supplying US$161.9 billion.
• The domestic sector recorded a US$30.6 billion trade deficit, while the FDI sector (including crude oil) generated a US$10.14 billion surplus.

Incentives for investing in Vietnam

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Vietnam’s Law on Investment specifies the three forms of incentives that are available to companies operating within the country:

• Corporate income tax (CIT) incentives, including various preferential tax rates and tax holiday rates;
• Import duty incentives; and
• Exemption or reduction of land rents and levies.

The CIT incentives can be granted to investments based on whether they belong to prioritised or government-encouraged sectors and/or are established in economic zones or disadvantaged locations, etc.

New incentives to boost private sector growth

On 15 January 2026, the Vietnamese government issued Decree 20, which provides detailed regulations and implementation guidance for several provisions of Resolution 198 on special mechanisms and policies to promote private sector development.

These provisions collectively establish a framework of targeted incentives covering tax relief, access to land and business premises, support for innovation and digital transformation, and capacity-building measures for the private sector.

For a better understanding of these appealing policies, please read:

• Vietnam Private Sector to Enjoy Special Policies: Resolutions 198 and 139
• Driving Vietnam’s Private Sector Growth: Incentives under Decree 20/2026

New tax regime with amended CIT Law

The National Assembly’s approval of Vietnam’s amended CIT Law on 14 June 2025, marks an important change in the country’s tax regime. While the headline tax rate remains unchanged, the underlying structure of how corporate incentives are granted has shifted, especially for manufacturing companies operating in industrial parks.

For further information, see: 2025 CIT Law: Implications to Manufacturing Companies in Industrial Parks

Industrial park classification in Vietnam

Industrial parks in Vietnam fall under three categories according to Decree No. 82/2018/ND-CP on the management of industrial parks and economic zones. These are as follows:

• Export processing zones: Industrial parks focused on manufacturing goods for export and providing services to support production for export. These zones must comply with the conditions, processes, and procedures outlined in the Decree.
• Auxiliary industrial areas: Industrial parks specialising in manufacturing auxiliary products and providing related services. Up to 60 percent of the rentable industrial land within these parks can be leased or re-leased for auxiliary industry projects.
• Eco-industrial parks: Industrial parks that emphasise cleaner production, efficient use of natural resources, and cooperation among enterprises to enhance economic, environmental, and social benefits through industrial symbiosis.

Vietnam’s national policy framework for manufacturing development

Recognising the importance of the manufacturing sector and industrial development to the health of the overall economy, Vietnam’s government has implemented several national schemes to further promote these areas.

Strategy on exports and imports for 2011-2020, with a Vision to 2030

Former Prime Minister Nguyen Tan Dung approved the Strategy on Exports and Imports for 2011-2020, with a Vision to 2030 in his Decision 2471/QD-TTg.

This framework outlines specific targets and implementation strategies for the manufacturing sector:

• Export orientation: Focus on developing high-tech and advanced products in the processing and manufacturing industries.
• Production and economic restructuring: Encourage and attract investment in supporting industries to meet domestic needs and integrate into the global supply chain, particularly in manufacturing mechanics, electronics, automobile components, textiles, footwear, and high technology.

Industrial Development Strategy Through 2025, with a Vision to 2035

The Industrial Development Strategy Through 2025, with a Vision Toward 2035, was approved under Decision No. 879/QD-TTg dated 9 June 2014. This strategy set specific development priorities for the following processing and manufacturing sub-sectors:

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• Mechanical engineering and metallurgy;
• Chemicals;
• Agricultural, forestry, and fishery product processing; and
• Garments, textile, leather, and footwear.

National Industrial Development Policy by 2030 with a Vision to 2045

Resolution No. 23/NQ-TW, dated 22 March 2018, outlines the National Industrial Development Policy for 2030 with a Vision to 2045. The specific targets to be achieved by 2030 include:

• Industry is expected to contribute over 40 percent of GDP, with the processing and manufacturing sector accounting for around 30 percent and manufacturing alone for over 20 percent.
• The proportion of high-tech products in the processing and manufacturing sector will reach at least 45 percent.
• The industrial added value growth rate will average over 8.5 percent, with the processing and manufacturing sector growing over 10 percent annually.
• Labor productivity in the industry will grow by 7.5 percent per year.
• The Competitive Industrial Performance (CIP) Index will rank among the top three ASEAN countries.
• The proportion of labor in the industrial and service sectors will exceed 70 percent.
• Development of large-scale, multinational, and globally competitive industrial clusters and enterprises.

Socio-Economic Development Plan for 20216-2030

The government’s action plan, designated in Resolution No. 25/2026/QH16, implements the Socio-Economic Development Plan for the five-year period from 2026 to 2026. The action plan states its specific objectives related to the manufacturing sector, which are:

• Average annual growth of the manufacturing and processing sector: 12.4 percent
• Average annual growth in the Index of Industrial Production (IIP): 11–12 percent
• Localization rate for key industries by 2030: 40–45 percent
• Industrial Competitiveness Index (CIP) by 2030: Ranked among the top three ASEAN countries
• Manufacturing and processing share of GDP by 2030: 28 percent
• Per capita manufacturing value added by 2030: US$2,400
• Average annual growth in merchandise exports from manufacturing and processing industries: 15–16 percent
• Average annual growth in commercial electricity: 11–12 percent
• Renewable energy share of total primary energy supply by 2030: 26.1 percent

National Green Growth Strategy for 2021-2030, Vision Towards 2050

Aiming to empower the economy through a green growth transition, Vietnam’s government issued Decision No. 1658/QD-TTg approving the National Green Growth Strategy for 2021-2030 with a Vision Towards 2050. Key goals are:

• Reducing the level of energy consumption in manufacturing, transportation, commercial, and industrial activities
• Facilitating the conditions for the development of new green manufacturing industries; and
• Encouraging the application of green technologies along with manufacturing activity management and control systems.

This article was last updated 22 September 2026.

This article first appeared on Vietnam Briefing, our sister platform.